Worcester Business Journal

18 2023 Economic Forecast • Worcester Business Journal • www.wbjournal.com ECONOMIC FORECAST 2023 R E A L E S TAT E More development e real estate market will see significant growth in 2023, as developers help solve a housing crisis and companies expand their footprint BY TIMOTHY DOYLE WBJ Staff Writer R eal estate money is flowing into Central Massachusetts. Investment firms, large and small, have been growing their portfolios with properties in the region throughout 2022. With many proposed developments starting in 2023, construction compa- nies should see significant work. e office market will be interesting to follow in 2023 as companies work out their strategies for where employees will be located. Steady improvement downtown e second half of 2022 has seen a number of companies moving into downtown Worcester. And though notable old businesses like the Owl Shop have le, new restaurants like La Central Bakery and Cafe and Ziggy Bombs have moved into the down- town area. A new art space has opened in the former Elwood Adams Hardware storefront, and Worcester Regional Food Hub has opened a space in the Glass Tower at 446 Main. e upcoming year will see more of the vacant retail and restaurant space along Main Street get tenants as well as businesses moving into available office space as companies figure out their strategies for moving back into the office. Blockbuster investment properties roughout 2022, Central Massachusetts saw a steady stream of national real estate investment firms paying top dollar for large rental communities and industrial properties throughout MetroWest and Worcester County. ere is no sign of this trend let- ting up in 2023. Developers are still looking for cash for new projects, and companies will continue to take sale leaseback deals to increase their liquid capital. Investment companies will be happy to spend money on reliably leased properties to grow their portfolios. Shuffling industrial ere are millions of square feet of modern indus- trial space in the pipeline, and much of it is being built on speculation. As the properties come online, some will be occupied by companies moving into the area, but local companies will likely be seeking to update their facilities. e next year could see a lot of movement between these newer properties and older warehouse space. Suburban multifamily rental properties It seems that every few weeks there is a new block- buster multifamily development planned in Worces- ter as developers seek to meet a rising demand for apartments and the city seeks to solve a housing crisis. Surrounding communities like Marlborough, Clinton, and Shrewsbury are seeking and receiving proposals for multifamily developments. In 2023, more of these projects will move along in towns and cities surrounding Greater Worcester, as long as residents concerned about traffic and crowding in schools don't put a stop to them. Developer halts $55M Worcester project, considers sale of Main St. site Construction of SilverBrick SkyHouse, a proposed $55-million, 312-unit renovation of 340 Main St. in Worcester, is on hold. e Worcester Executive Office of Economic Development told the City Council that New York developer Silver Brick Group LLC confirmed in May that the project had not begun, and that due to the rising costs of materials and construction, the project has been put on hold. SilverBrick will determine if it will move forward with the project or consider other options such as a sale, according to the EOED's communication to the City Council, which was part of the Semi-Annual Tax Increment Financing / Tax Increment Exemption Report. In the event of a sale, the TIE plan would not automatically be transferred to the new owner, according to EOED. SilverBrick did not return requests for comment. SilverBrick promised to give $100,000 to the city's Affordable Housing Trust at the completion of construction and delivery of the certificate of occupancy, said Robert Burgess, spokesman for the City of Worcester. SilverBrick purchased 340 Main from Commerce Associates of Worcester in November 2020 as part of a $14.5 million multi-property deal. While multifamily starts are at levels not seen since 1986, construction costs, labor shortages, supply-chain issues, and higher interest rates have led to 143,000 multifamily units authorized but not started in August, just shy of the record set in July at 147,000, according to national real estate news organization CoStar. Paying Polar Park's debt: For the second year, underwhelming tax collections were saved by a public property sale In their first two seasons at the Polar Park baseball stadium, the Worcester Red Sox attracted a combined 894,507 fans to their home games in the Canal District, ranking sixth among minor league teams in both years. Yet, the number of fans has little to do with the promise of the $160-milion public ballpark paying for itself through new developments and added tax revenue. Former city manager Edward Augustus called this pay-for-itself plan the guiding North Star when making financial decisions on the project that enticed the team's co-owner and chairman, Larry Lucchino, to move the Boston Red Sox's top minor league affiliate out of Pawtucket, Rhode Island in 2021. e new City administration echoes Augustus' sentiment. "It is going to pay for itself," said Eric Batista, who on Nov. 16 took over as Worcester's city manager. "at is what the goal is, and that is what we are aiming for. We don't have any fear right now of anything changing." To cover its $3.9-million annual payment for fiscal Top real estate stories from 2022 W PHOTO | COURTESY OF UMASS CHAN MEDICAL SCHOOL Construction workers sign the beam for the topping-off ceremony for the new $325-million research building at UMass Chan Medical School in Worcester.

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